The art of the 'smart' financial institution

This is a contributed piece by Amanda Howe, Innovation Consultant at Fluxx

According to Gartner, the Internet of Things (IOT) will have totally consumed consumers’ lives by 2020. From keyless entry homes to fridges so smart they will virtually prepare a Michelin style meal from the replenished items it has seamlessly and intuitively replaced without being asked. The wheels are truly in motion for an easier life. Data will stream in from every digital artifice of human existence and be one step ahead - anticipating disaster, delight and dinner.

Putting glib comments aside, Bruce Sterling argues in his work The Epic Struggle of the Internet of Things that IOT has “nothing to do with the consumer and everything to do with the business interests of the service providers”. Given that data is the new currency, according to Sterling “The Internet of Things is an epic power-grab by the lords of the network”. He focuses on the “big five” of Google, Amazon, Facebook, Apple, and Microsoft saying, “They are fighting to gain control of as much human data as physically possible”.

It goes without saying that the Internet of Things agenda is being driven by the technology industry with the eager boosterism of the business community. But how much will rain down specifically on financial services and what other benefits will enrich this sector?

According to Accenture, the Internet of Things will deliver “an unprecedented level of data and data-driven customer insight for banks”. The idea is that banks will be able to provide their customers with a truly bespoke experience, based on customers’ day-to-day lives. Accenture make the slightly less than innocuous prediction that, “The Internet of Things is the key factor that will enable a bank to fully transform into a Bank of Things.”

But banks need to capitalise on the enormous amount of customer data they already have and integrate it with insights gleaned from social media and other data sources. Analytics will enable banks to use this data to develop a better understanding of each customer, allowing them to deliver a more tailored experience. Banks must understand what makes today’s customers different — and innovate and transform to better anticipate and meet their needs.

Financial institutions will be able to anticipate customers’ needs and respond to their changing circumstances, offering timely, relevant solutions that assist them in achieving their financial goals. Banks will continue to be trusted advisors but will also act as facilitator and value aggregator for their customers. They should in turn build on customer loyalty as well as cross-sell for additional business. Turkish bank Garanti’s iGaranti [Turkish] mobile app alerts its customers about special offers on their favourite brands; offers saving suggestions; and estimates month-end balances based on spending patterns. Big brother issues have lost out to data diets that consumers seem ready to ingest, so what else could they benefit from?

Predictably, Apple is brave enough to take a big bite into the core of seamless payment and communication with Apple Pay. Its play in mobile payment technology and one of the newest applications of the Internet of Things within the financial services industry. Apple Pay users send secure mobile payments without compromising their personal data. More seamless transactions make a big difference in creating a better customer experience. And Apple’s iBeacon technology allows retail customers to access location-specific coupons, product info or recommendations while browsing in stores like J.C. Penney and Macy’s.

And even UK and US based insurers aren’t resting on their laurels and are experimenting with telematics to monitor customers’ actual driving behaviour and adjusting premiums accordingly. Small but significant steps towards a world where accurate, customer-centric pricing is the norm. At Fluxx we are already working with home and pet insurers looking to adjust premiums based on data streams from smart devices that are setting out to protect your valued assets as well as simply insure them. This stuff is happening today. The much anticipated automotive vision of the day that whilst filling up at the petrol station you’ll also pay for parking tickets and your car tax as well as petrol via your dashboard can’t be that far off.

Whatever the future holds, it is clear that consumers are looking for more seamless and more personal experiences. They understand the value of their data sets and are looking for their banks, their insurance companies, their telecoms providers and even their household technology to know them well and get them right. Personalised customer experience is key - as long as it’s beneficial, rewarding and relevant. Smart financial institutions will have to work hard to stay even one step ahead. They have to focus on their data capabilities, invest in the right technology and open their minds to understanding their customers as individuals within their growing social landscapes.